Researcher ORCID Identifier

0009-0000-9476-7402

Graduation Year

2026

Date of Submission

4-2026

Document Type

Campus Only Senior Thesis

Degree Name

Bachelor of Arts

Department

Economics-Accounting

Reader 1

Andrew Finley

Abstract

This paper examines whether auditors charged higher audit fees to U.S. public firms exposed to SEC Staff Accounting Bulletin No. 121 (SAB 121), which in March 2022 required firms safeguarding crypto-assets for platform users to recognize a corresponding liability and asset on their balance sheets. Using a merged Audit Analytics and Compustat panel of 1,241 firm-year observations across 222 firms over fiscal years 2019 through 2024, I estimate a difference-in-differences specification comparing 21 SAB 121-exposed firms to a control group of financial and financial-adjacent firms, with firm and year fixed effects and standard errors clustered at the firm level. In the preferred specification, the coefficient on Treated × Post is 0.160 and is statistically significant at the 5% level, implying that audit fees for exposed firms rose by approximately 17.4% relative to control firms after the guidance took effect. The estimate remains positive on a propensity-score matched sample, and a year-by-year event study specification does not provide strong evidence against the parallel trends assumption. The evidence is consistent with auditors pricing the additional audit scope, specialized expertise, and engagement risk associated with cryptocurrency custody obligations, and it contributes to the audit fee literature by connecting the traditional Simunic framework to the emerging literature on digital asset accounting and auditing.

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This thesis is restricted to the Claremont Colleges current faculty, students, and staff.

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